Trade logistics industry set to weather the storm

Of particular concern is a deteriorating cash flow, as well as the level of increased client failure through administration or receivership.
The latter aspect requires vigilant control of those service providers, who provide a facility for payment, on by half of clients, of customs duty and GST.
This “banking facility” has serious repercussions when a client company fails.
A lack of attention to debt and internal control policy and procedure has seen significant numbers of service providers placed in the invidious position of crystallising losses and placing their own entities at risk as a result of these issues.
The downturn in international trade has seen internal operational changes in most – if not all – service providers. They include human resources, client expectations and regulatory intervention.
However, the key operational aspects of sound business practices remain a challenge.
In human resources, the industry is now seeing a “correction” in salary levels. This particularly involves licensed customs brokers who now see a market landscape significantly different of some two years ago, when there was an acute shortage of skilled and experienced employees in most categories.
To date in 2009, there has been some retrenchment of operational, international freight forwarding and licensed customs broker staff.
With a deteriorating level of superannuation options, many long-term employees have deferred retirement to meet this challenge and this has created a blocking effect to new entrants into the industry.
It has also provided the opportunity for employers to determine human resources needs based on either skill and experience, or the opportunity to seek younger staff to build for the future.
Whichever choice is taken, there are those who will see themselves as the winners or losers in this employment process.
The outcome of this determination will be interesting to judge for the future and as an indication of where the industry will position itself as a professional service responding to the regulatory challenge, as well as to client expectations.
Notwithstanding the landside logistics issues for cargo receipt and delivery (either air or sea freight) regulatory intervention, whether it is customs or quarantine, border security (and the need to ensure safety and security in supply chain), the most telling aspect for all service providers across the spectrum of multinational or small-to-medium enterprises is the challenge to match costs to revenue.
Not to address this fundamental equation will not necessarily see the loss of clients but will mean business contraction and possible failure.
Service providers in international trade logistics and supply chain management have seen market contraction before.
However, it has not been to the same level or at the same speed of market loss.
On the basis of what has already been seen, many have adapted quickly to the business challenge.
Business survival is paramount so with armed with instinct and flexibility, expect to see these service providers around for a considerable time to come.

Stephen Morris is executive director of the Customs Brokers and Forwarders Council of Australia.

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